The grey list of the Financial Action Task Force is meant to coerce countries into complying with international norms on terror financing and money laundering. No country wishes to join Iran and North Korea on the FATF’s black list, which entails sanctions that cut access to the global financial system.
Once they are on the grey list, countries make serious efforts to completely shut down access to funds for terrorist groups. But Pakistan, which has gone on the grey list at least thrice just in the last decade, seems to be striving to do just enough to avoid the black list. When a recent FATF meeting extended Pakistan’s grey listing until June 2020, Pakistan’s foreign minister Shah Mehmood Qureshi celebrated the decision, saying that India had failed to push Pakistan into FATF’s black list.
The reason Pakistan keeps entering the grey list is because of its failure to shut down all access to funding of United Nations Security Council (UNSC)-designated terrorist groups, including the Taliban, Al-Qaeda, Lashkar-e-Taiba and Jaish-e-Mohammad. The international community keeps asking Pakistan to prosecute leaders for accessing illicit funds and to tighten laws and banking security regulations relating to terrorist groups.
Pakistan’s intent is questionable
But Pakistani establishment knows that most major countries remain reluctant to impose the strict banking and international finance sanctions that at present apply only to Iran and North Korea. The US and the UK see greater chances of incremental Pakistani cooperation through monitoring and pressure than might be forthcoming if the country is forced into isolation through absolute sanctions. Others, such as Turkey, Saudi Arabia, and UAE worry about the impact of financial sanctions on fellow Muslim Pakistanis. The grey list, which currently comprises 12 countries and is formally described as “other monitored jurisdictions” is another matter. Those included in it are constantly reviewed for their actions to stop terror financing and money laundering.
Ideally, Pakistan would like to be removed from the FATF grey list, too, because it entails acting on specific demands about jihadi terrorists Pakistan has managed to support and protect for at least three decades. But the grey list is better than the black list, especially when the Pakistani establishment’s intent is not to shut down the jihad completely, not any time soon.
And since it is difficult to keep a country on the grey list forever, there is a significant likelihood that Pakistan would get off after a decent interval and a spate of superficial measures.
Thus, Pakistan continues to play a cat and mouse game with the international community on terror financing. It has become very good at parrying pressure since it was warned in 1992, for the first time by the Americans, about harbouring and nurturing jihadi groups targeting India. Then, after the kidnapping of an American tourist by a group called Harkat-ul-Ansar (HuA), Pakistan banned the group, only to allow it to resurface as Harkat-ul-Mujahideen (HuM). Since then, a now-familiar pattern has emerged. Pakistani officials work off a checklist that helps evade the immediate pressure without permanently shutting down favoured jihadi groups. Fear of financial sanctions is something Pakistani officials take seriously but only enough to calibrate their actions to fulfil legal and technical requirements of the moment.
Pakistan takes one step forward to get relief from international pressure, and two steps back once the pressure is off, and again a step forward when the pressure resumes. In the end, the highly crafted manoeuvers leave the country standing in the same place.
Pakistan has not fulfilled its commitments under UNSC Resolution 1267, which requires all states to freeze the assets of people and organisations on a list established by the resolution. This list includes Lashkar-e-Taiba’s Hafiz Saeed and his ‘Islamic charities,’ Dawood Ibrahim, Jaish-e-Mohammed and its leader Maulana Masood Azhar.
The Afghan Taliban and the Siraj Haqqani Network were also on the list for years, but their status is on the verge of changing, given the US’ willingness to negotiate with them in an effort to withdraw from Afghanistan. Political considerations clearly trump an earlier international consensus to wage a global war on terrorism.
A multilateral institution like the FATF is limited by the political compulsions of its member countries; it must also accept the checks on various boxes in its highly technical compliance criteria. It does not act on the basis of assessing a country or the government’s intentions, based on its track record of many years.
In 2008, the FATF identified Pakistan as a country posing a high risk of money laundering and being non-cooperative in implementing international rules on terrorist financing, only to let Pakistan off the hook after a series of technical measures.
Pakistan’s conduct was questioned again in 2012 and the country was put on the grey list, only to be removed from it in 2015, after changes in laws dealing with money laundering and terrorist financing.
This time around, Pakistan has gone further than ever before to comply with FATF-related demands, possibly because India, France, and the US have held out the threat of putting the country on the black list. Pakistan has convicted Hafiz Saeed of some terror-financing offences, though not for the 26/11 Mumbai carnage or any of the other major attacks he initiated.
The conviction could easily be overturned once the fear of FATF blacklisting is over and Pakistan is again off the grey list.
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